Writer, Actor Drama Not What it Seemed

Michael Mahern was giving the performance of a lifetime. Standing in front of reporters and photographers on May 4, the secretary-treasurer of the Writers Guild of America put the best face possible on a deal just reached with the studios and networks a deal that would avert a strike that Hollywood had been dreading for almost a year.

“People told us it couldn’t be done, even if we stayed on strike for a year or more,” Mahern proclaimed before live cameras at the WGA’s headquarters. “Today, we are announcing ground-breaking improvements, and it has been accomplished without a strike.”

As if to affirm Mahern’s words was the presence of industry heavyweights DreamWorks’ Jeffrey Katzenberg, Disney’s Robert Iger, Warner Bros.’ Alan Horn and Paramount’s Sherry Lansing among them.

CNBC’s Jane Wells, interviewing Mahern right after the press conference, gushed: “Thank you very much, Michael. I know you did win.”

Wells was so taken with the moment that CNBC Anchor Ron Insana quipped: “Jane’s going to be out trying to get a three-picture deal now while she’s in the room.”

To be fair, many of the reporters followed Wells’ lead, highlighting the advances that the writers had made without a walkout many in the media had labeled as all but inevitable. “Happy Ending in Hollywood,” trumpeted a Washington Post headline the next day.

But as details of the agreement emerged in the next week or so and most of the press had long since moved on the picture on which side won or lost got murky.

While there were gains in residual payments including Fox Broadcasting Co. paying writers the same amount as ABC, CBS and NBC, beginning in three years the overall economic package was tens of millions of dollars less than what some guild officials originally were pressing for. More significant were entire areas that the writers gave up on, such as residuals for videocassettes and increased payments for old TV shows rerun on cable.

One prominent producer labeled it “essentially a UAW contract a 3.5 percent increase,” referring to the modest increase in minimum payments for television and film scripts. “It was a lot of sound and fury signifying nothing.”

“Did we do as well as we would have liked? No,” conceded John McLean, executive director of the WGA. “But in every negotiation, a good deal is probably defined as both sides being somewhat disappointed in the result.”

Illusion vs. reality

Labor talks inevitably involve a series of calculated spins by both sides starting with the inflated initial demands and concluding with perceptions of which side won or lost. Issues are important, of course, but they are sometimes overshadowed by elements of psychology and momentum.

In examining the last 12 months of industry and media hype over the prospects of strikes by writers and actors who themselves are voting this month on a proposed contract very little is as it appeared at the time.

In an industry where illusion becomes the barometer of success, the past year was a sorcerer’s delight.

–

Illusion:

That the WGA’s rank and file was solidly behind the guild leadership in pursuing an aggressive agenda, even if it meant going out on strike for weeks or months.

Reality:

A younger and richer guild membership with minimal experience in labor conflicts had little stomach for a work stoppage a feeling that intensified in the crucial period between late March and the first week of May, when a deal was finally worked out.

Illusion:

That the Screen Actors Guild was ready to join the writers in a work stoppage.

Reality:

SAG officials signaled almost from the start that they were ready to deal. And for a very good reason: Their own shop was in political turmoil, thanks to last summer’s costly walkout of commercial actors, and there was little enthusiasm for going out a second time in less than a year. “We looked at (the negotiations) as a problem-solving exercise, rather than going in and saying ‘we demand this,'” said outgoing SAG President William Daniels.

–

Illusion:

That networks and studios, now part of huge entertainment conglomerates, represented a unified body that would de-claw the guilds by threatening to run reality programming that didn’t require actors or writers.

Reality:

Significant divisions existed not only among the companies, but also among the divisions within companies. Movie executives generally took a harder position because their stockpile of features provided more leverage than the network programmers who recognized the need to air more than just news magazines and quiz shows.

Illusion:

A study by the Milken Institute and commissioned by former Mayor Richard Riordan outlined the dire economic impact a strike would cause in Los Angeles.

Reality:

With so much movie and television production ramped up during the first half of the year in anticipation of a walkout, the report’s author now concedes that the effects cited were overstated.

–

Illusion:

That Riordan played an influential role in bringing the two sides together.

Reality:

In calling for labor peace and meeting privately with both sides, the mayor made lots of headlines in the days preceding the May 1 contract expiration but mostly because no one else was talking.

In the end, the writers never came close to authorizing a strike nor did members of SAG, which hammered out a deal eight weeks later.

Strike hype

In retrospect, history could have provided some clues on the final outcome. The WGA has gone out on strike only six times out of 21 contract renewals. The last time was 13 years ago. Three years before that a two-week strike was aborted and nearly wrecked the union.

For all the talk about militancy, the guild generally has maintained close ties to studio and network executives; its executive director, John McLean, is a former CBS executive. Unlike other unions, where job and salary are locked in, the guild’s members operate on a project-by-project basis and often depend on the whims of studio executives the same folks they’re bargaining with. No wonder the more militant guild members are seldom the ones who are actively seeking work.

So why did the hype so often overtake reality?

The easiest explanation can be summed up in a word: Hollywood. No other industry is covered as breathlessly and indulgently as entertainment. The prospect of a strike by actors and writers that would shut down the major production studios was simply too good a story to let lie.

“Suddenly, we find ourselves at a precipice,” intoned a front-page editorial in Variety just as contract talks began in January. If writers and producers cannot come to terms, the piece continued, “a nightmare scenario will be set in motion that could have a cataclysmic impact on the Hollywood community.”

From the start, two factors juiced up the media’s interest: A hardball stance by the WGA and the ramping up of production schedules. This set the stage for a manic stretch last summer that found agents and attorneys giving up their summers in the Hamptons or the Greek Islands in favor of cutting quick deals for their clients who feared they would not be working in another 10 or 12 months. This, in turn, further fueled the media interest, even though actual negotiations were months away.

“There was a lot of garbage being reported,” said SAG spokesman Greg Krizman.

No appetite to strike

Seldom reported was perhaps the biggest question: whether there was an appetite among the rank-and-file to hit the picket lines, as they did for almost six months during the last major Hollywood strike in 1988.

There was some basis for the guild’s early aggressiveness. The initial contract proposal in 1998 was turned down, leading to charges that the leadership had gotten too soft. “Little had really been solved since the 1988 strike,” said McLean. “The approach of the producers was, ‘You’re not getting anything and if you don’t like it, strike.'”

At the same time, the guild makeup had changed over the years. A WGA study showed that the employment rate for writers aged 30 and under had increased from 61 percent in 1987 to 73 percent in 1997, while the rate for writers in their 50s had dropped from 40 percent in 1987 to just 19 percent in 1997.

Pay also had changed: In the early 80s, television writers in their 50s were the highest paid, but by 1997, as producers began targeting younger audiences, it was writers in their 30s who made the most.

With total earnings under WGA contracts jumping from $593 million in 1995 to $773.6 million in 2000 and some writers individually making well into the millions each year it wasn’t easy pushing a strike. Especially ominous were Mahern’s warnings last July that “now is not the time to be buying the biggest house or the nicest car you can possibly afford.”

But many of them wanted to do exactly that. “People didn’t want to lose their houses over pie in the sky and that’s what you’re looking at in this type of situation,” said “Law & Order” producer Dick Wolf, who had been staunchly opposed to a walkout and blames Guild President John Wells for the early saber-rattling.

The mayor makes the rounds

Last summer, Richard Riordan and his staff had been caught off guard by the economic damage incurred from the lengthy SAG strike against commercial advertisers. The former Los Angeles mayor was focusing his attention on pulling off the Democratic National Convention.

But this was just a taste of what might happen if the actors and writers went out on strike the following year. With less than a year to go in his term, Riordan didn’t want to be remembered for Hollywood labor strife that could shut down the industry.

“We had spent the last seven years successfully building up the local economy, bit by bit,” said Jessica Copen, then the mayor’s spokeswoman on economic development issues. “Suddenly, here was this terrifying idea of all the progress we had made dissipating right before our eyes. No way did he want to leave office with such a devastating strike out there.”

Riordan began making the rounds: Tom Short of the International Alliance of State and Technical Employees, representatives of the Teamsters union, Iger, Katzenberg, Daniels, Jay Roth of the Directors Guild of America (who used to work with him at his law firm), representatives of the WGA, and perhaps most importantly, industry legend Lew Wasserman, who was being solicited for advice from all sides.

“It was the long-term future of the industry in L.A. that was my main concern,” Riordan said.

Public venting

Even though six weeks of negotiations between the WGA and the Alliance of Motion Picture and Television Producers had broken off on March 1 without an agreement, some progress was made. If nothing else, the guild came down substantially from its initial demands and the Alliance made some modest offerings.

But for public consumption, both sides vented the usual rhetoric about the growing likelihood of a strike.

“We are deeply concerned,” Wells warned.

“We are so far apart on the economics that there was no way to bridge the gap,” Counter added.

No one really expected a deal to be cut with a full two months to go before the contract expired. The guild was not about to fully back down from its aggressive, strike-threatening posture and the producers were not about to give away the store.

The weeks after March 1 saw a high-stakes spin game, with each side maintaining that their position was fair and that the other side was being unreasonable.

WGA officials started the ball rolling with a series of town hall meetings that updated members on the status of the talks and also offered a temperature reading on the rank-and-file’s strike sentiments. Mahern boldly predicted after a meeting of 1,000 writers in early March that “if we had to take a strike vote that night, I’m sure it would have been a 90 percent vote.”

But the question wasn’t so much whether the membership would authorize a strike, but how determined those 20- and 30-somethings would be in striking, week-after-week. “They’re upper middle-class people,” said an attorney involved in the talks, “and they’re not going to go on strike except for a cause.”

The Alliance had its own PR dilemma how to deflect claims that under the WGA proposal, the studios would only be paying out an additional $32.2 million a year, and that at some shops, such as DreamWorks, the number would be under $1 million. That’s bagel money by Hollywood standards.

With help from an outside public relations firm, Rogers & Associates, studio executives debated how to respond. Going public raised the risk of inflaming negotiations; saying nothing allowed the guild to dominate the public debate. In the end, the studio chiefs met with reporters to challenge the guild numbers and stress that “meeting in the middle” wouldn’t be acceptable.

“We can’t put ourselves out of business,” Katzenberg said, putting an end to months of his diplomatic gestures to the other side.

There’s a deal to be made

There also were incendiary hints from several studio executives that their businesses would only be marginally affected by a strike thanks to a stockpile of movies and the popularity of non-union reality shows. It was even suggested that a strike would cut operating costs. “The studios were absolutely sending messages through the rumor mill that ‘we like this strike,'” said entertainment attorney Peter Dekom.

This highly visible thrust and parry left the impression that both sides were preparing for a walkout. “Once the other side doesn’t believe you’ll strike, the first two words out of their mouths are ‘F,, ’em,” McLean stressed.

But behind the scenes, cooler heads prevailed. For all the success of shows like “Survivor,” the networks still needed “ER” and “Frazier.” And the studios, especially smaller ones like DreamWorks, needed to keep making movies.

During a meeting with Riordan on March 20 just as the spin machines were going full blast Wells confided that contrary to the conventional wisdom being reported, a deal was within reach. “Sure there was a lot of work to be done and the pressure of a deadline was needed to force their hands,” Riordan said. “That’s the nature of the negotiations.”

Significantly, Wall Street investors never seemed concerned that a strike would adversely affect the Viacoms and AOL Time Warners. They had bigger worries namely, a soft advertising market that was bringing down stocks and that showed little sign of resurgence, no matter what was being shown on TV.

Attending a meeting of Wall Street analysts where the upfront TV advertising market was discussed, McLean himself recognized that the guild would have to make some concessions. The upfront season in late spring is when advertisers buy media time in bulk for the fall and this year’s upfront was looking dismal, with or without a strike. “There were a number of issues we didn’t push because we knew now wasn’t the time,” he said.

Riordan’s initiative

Soon after talks broke off on March 1, there were suggestions in the Riordan camp that the mayor try to get directly involved in mediating the strikes. But neither side showed much interest, and besides, he lacked the kind of insider knowledge that would make him an effective mediator.

The last week of March, Riordan decided to apply indirect pressure by commissioning a study on the potential economic impact of a strike by writers and actors. The Milken Institute in Santa Monica was an obvious choice. Going to a major university like UCLA would have taken months to get the necessary approvals and the window of opportunity here was a mere four to six weeks.

Ross DeVol, the institute’s director of regional and demographic studies, got the go-ahead on April 5 to conduct the study with orders to complete the findings by April 18. “I was hoping we could get a month to do it,” admitted DeVol, whose office already was in the midst of preparing another major study for Forbes magazine.

It would prove to be a challenging assignment on such short notice, especially given that the entertainment industry is largely made up of independent contractors who are difficult to accurately measure. “The movie and TV industry is so diffuse and much of it doesn’t show up in the official numbers,” said DeVol. “You do find yourself checking the numbers more carefully, especially when you’re trying to turn something around quickly.”

Another complication: Riordan’s office kept wanting more data. Just two days before the due date, DeVol was asked to determine the local and state tax implications of a strike. “I was somewhat uncomfortable trying to give them estimates in that short of time,” DeVol admitted. “If anything, that is probably the weakest number.”

In the end, the institute came up with some eye-popping conclusions. A prolonged strike (five months for WGA and three months for SAG) could reduce employment in Los Angeles by as many as 81,900 jobs, result in an income loss of $4.4 billion and boost local unemployment to nearly 7 percent.

The media bites

There is nothing like scary-sounding numbers to capture the media’s attention, especially in the absence of anything else to report. Throngs of reporters attended a Riordan press conference announcing the Milken findings. That was followed by on-site press conferences throughout the city that featured a cadre of small business owners whose livelihoods depend on the entertainment industry all arranged through Edelman Public Relations Worldwide, which the mayor had hired to engage in a marketing blitz. (Both the Milken and Edelman work totaled less than $100,000 and was paid for through a city discretionary fund).

“The national and international press just ate this up,” Copen said. “In my five years with the mayor’s office, we never got more coverage.”

Added DeVol: “It kept showing up in every article that ran afterwards. It was striking that it had such staying power.”

For all that coverage, however, little attention was paid to the study’s methodology especially that the job and income loss estimates did not consider how much would be made up by stepped-up production before and after any work stoppage. That’s bound to skew the calculations. In 1988, the WGA was on strike for almost six months yet writers’ income for the year was down only 12 percent from 1987.

Looking back, DeVol says the figures are accurate plus or minus 20 percent.

“I think you could argue that the numbers are overestimating the true impact,” DeVol said. “There had already been a buildup in the first quarter. Everybody was trying to get everything through the pipeline so even if there wasn’t a strike, activity was going to fall off.”

By most accounts, negotiators on both sides gave short shrift to Riordan and to the study. The WGA and the Alliance, in a joint statement on April 19, expressed appreciation for the mayor’s efforts and left it at that. The biggest benefit, sources close to the talks said, is that it got the media off both sides’ backs just as the second and final round of talks was getting started. Suddenly they found something else to cover and they pounced on the new data.

Reality bites

When the WGA began preparing for contract talks last summer, its wish list was huge. It included changing the residual formula for videocassettes and DVDs, increasing the paltry payments for old TV shows rerun on cable, adjusting the payment schedule at Fox to match the other three major networks and guaranteeing higher payments for writers of movies written for Showtime, HBO and other pay services. All told, the early economic package would be several times more than any previous contract and, in the words of one studio executive, “a total, absolute non-starter.”

There also were numerous demands in the area of creative rights that involved giving writers more respect in the production and release of motion pictures.

As the May 1 contract deadline drew closer, the guild was quietly making strike preparations that included a red-and-black logo to be placed on picket signs, a 25-line phone bank and even determining the two studios that would see the first picket lines (Fox and Disney). A $7.2 million strike fund had been established and another $2 million set aside to assist some 7,500 active members.

Officially, the guild officials insist they were prepared to strike up until the last moment. But in any labor negotiation, there comes a time when the union leadership, chalking up their wins and losses, must determine whether the turmoil a strike would cause is worth whatever incremental gains that would be made.

In this case, the answer was no.

Said one WGA negotiator: “We had set up relationships with the major CEOs and they were saying to us in private, ‘Basically, you’ve done better than any other creative guild in the last 20 or 25 years and this is as far as we’re going to go.'”

So after all the bluster of last summer, the WGA had to settle. There was no increase in residuals for videocassettes and DVDs (“We pressed on with our proposals until the last days of bargaining,” a WGA statement noted.) Also nothing for cable reruns. As for creative rights, there was the promise that writers would be invited to premieres and, with approval from the director, permitted to visit sets (breakthroughs that, if anything, underscored how undervalued writers continue to be).

They ended up settling, however, because of a few financial gains in foreign residuals and made-for-pay TV movies along with a $5,000 flat payment for films appearing on DVD. Fox finally agreed to match the other networks, beginning in the contract’s third and final year. And most important, no rollbacks.

Time to reflect

With the contract ratified, and the SAG membership almost certain to approve their deal this month, union officials have turned off their spin machines and begun to reflect on a year that turned Hollywood on its head even without a strike.

“It was a disappointment to us, but having said that, we won in a sense that we broke a log jam,” said Dan Petrie Jr., the WGA’s vice president. “We got issues addressed that hadn’t been addressed, in some cases, for 20 years.”

McLean put it this way: “Had we been out there for six months, could we have done a better job?” he asked reflectively. “Probably. Does that make sense? Not to me.”